Despite the health effects and new regulations, many stocks in the tobacco sector are hitting new highs Wednesday. Philip Gorham, analyst at Morningstar, said the sector could continue rallying.
“[The rally] can last until manufacturers can no longer raise prices above the rate of consumption—and I don’t see that point coming any time soon,” Gorham told CNBC.
“We don’t see a kink in the demand curve quite yet.”
Gorham said his “best in class” picks include Philip Morris and Altria .
“But look out of Lorillard, ” he cautioned. “They’re risky, but we don’t think there will be much impact from the FDA investigation.”
Watch: CNBC original documentary 'Cigarette Wars' premieres Wednesday, March 2nd 9p ET. And don't forget to check out the special show page.
Scorecard—What He Said:
- Gorham's Previous Appearance on CNBC (Feb. 4, 2011)
CNBC Data Pages:
Where the Other Top Tobacco Stock Stands:
Gorham does not own shares of PM, MO, LO, RAI or RTI.